Should water be supplied by local authorities or private companies?
A violent conflict in Bolivia has recently shown that both can work, but only if the wishes of consumers are taken into account
A bill to privatize Bolivia’s government-owned water network recently sparked off a “water war” that grew into one of the Andean country’s most serious social crises of the past few years.
The conflict erupted in January 2000 when the price of drinking water was tripled in the central Bolivian city of Cochabamba, and peasants in the surrounding arid region suddenly found that the water they had been drawing freely for generations no longer belonged to them. City-dwellers accustomed to subsidized water supplies were confronted by the true market price, while the peasants—mostly Quechua Indians who had owned the water for centuries—involuntarily found themselves customers of Aguas del Tunari, a subsidiary of the British firm International Water.
No clean water for one third of the people
These changes were the result of Law 2029, a bill passed at the end of 1999 which privatized state drinking water and sewage disposal. “The law’s big mistake was to privatize the sources of the water as well since franchises are usually only applied to administration of the service,” says Bolivian hydrologist Carlos Fernández Jauregui, a UNESCO water expert. Furthermore, the law was pushed through without any kind of public hearings and under pressure from the French firm Lyonnaise des Eaux, which is in charge of the water supply in the capital, La Paz, through a local company called Aguas de Illimani.
In South America’s poorest country, where a third of the population has no access to clean water and 70 percent of people live below the poverty line, there are plenty of reasons for social unrest. Once begun, the water conflict escalated into a much wider rebellion lasting 10 chaotic months and causing huge economic losses, an 11-day state of siege and a dozen deaths. The unrest was serious enough to make the government cave in. In April, Aguas del Tunari pulled out of the contract they had signed with the state to build a dam at Misicuni aimed at boosting the Cochabamba region’s water supply.
But in spite of the citizens’ victory in the “water war,” Cochabamba’s basic problems have not been solved. The city has no more than five hours of water a day, and only 40 percent of farmers in the surrounding area have access to clean water. “The only way to end Cochabamba’s water shortage is to build the dam,” says Fernández Jauregui. “The other solutions are just sticking plasters.” Other plans, such as one to tap into underground rivers, have so far made little headway, while efforts to form a cooperative or limited company with the involvement of local people have come to nothing.
Aside from the dam, the Misicuni plan includes building a tunnel, water purification plants and sewage farms to the tune of $300 million. The generous terms the privatization law gave to contractors were justified in terms of the need to attract enough investment to pay for the multi-million-dollar project on top of the money provided by Bolivian taxpayers. In the end, however, the project backfired on President Hugo Banzer’s government: Aguas del Tunari is demanding heavy compensation for having to withdraw from the project, stoking fears that if the state does not pay up, Bolivia’s reputation with foreign investors will be harmed.
Taking culture and customs into account
But the departure of these foreign firms is not necessarily the best solution, not even for the poor. Due to their international experience, multinationals are usually better value for money than local public utilities, they use the water more effectively and pay better salaries to their technicians. Governments, for their part, must shield citizens from the natural commercial appetites of these giant water companies.
In Fernández Jauregui’s opinion, Bolivia’s water problems stem from administrative failures, and Bolivians are paying for their inexperience in water legislation. “There aren’t any laws or institutions and there isn’t enough suitable infrastructure to cope with the water problem,” he says.
Other Latin American countries, in contrast, have acquired useful experience in solving the thorny conflicts caused by water.
Communities are very attached to the free supply of water enjoyed by previous generations, but through frank and open dialogue they can also come to understand that it is a scarce resource which must now be paid for. “There were obviously other ways to tackle the water problem in Bolivia,” says Fernández Jauregui. “Water legislation has to be based on consulting local people, as other laws are. If local culture, customs and ways of life had been taken into account, all these problems could have been avoided.”
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